Global consulting firm Aon is launching a new pooled employer retirement plan on Jan. 1, 2021.

U.S. defined contribution plan sponsors will be able to transfer their assets and members to the pooled employer plan — or PEP. Aon will be managing the investment lineup and taking care of the whole ecosystem involved with offering DC benefits to employees, says Rick Jones, senior partner at Aon.

While multi-employer plans have existed for years, so have barriers to their broad adoption, he says. The concept of a PEP is now possible because of the U.S.’s Setting Every Community Up for Retirement Enhancement Act.

In the past, employers required a common tie for the purposes of delivering a retirement benefit, like being in the same industry or geography, notes Jones. Further, the one-bad-apple rule existed, meaning that if one party didn’t meet the qualification for the plan it would disqualify the whole plan. “This SECURE legislation signed into law at the end of last year did away with those two requirements.”

With the legislative hurdle cleared, Aon has brought on Voya Financial as record keeper and is now going to market to sign up employers for the new PEP, specifically targeting existing DC plans.

“This will produce economies of scale so that employers can band together and get even greater purchasing power and leverage with their solutions — more efficiency. It will result in less fiduciary risk for plan sponsors as they offload decisions to experts like us to make day-to-day, and more strategic, retirement plan decisions for them and their participants.”

He also notes the PEP will result in less work for plan sponsors because they won’t need as many resources to run their own savings plans and can offload some responsibilities and risks.